National Mineral Policy 2006 - Department of Mines

Chapter 7Other Issues(Term of Reference no. 7)To examine any other issue relevant for stimulating investment flows and inducting state-ofthe-arttechnology into the sector7.1 In this chapter, we deal with the following four issues, which are not specificallyincluded in the TOR but whose resolution is crucial for stimulating investment andtechnology flows:(i)(ii)(iii)(iv)Raising funds for prospecting;Allocation of captive mines to steel makers;Restrictions on the export of iron ore; andPolicy on beach sand minerals.RAISING FUNDS FOR PROSPECTING7.2 When dealing with the Canadian model in paragraphs 1.30 and 1.31 it was proposedthat unbundling of the currently integrated activities of exploration and mining will help toattract FDI and technology into prospecting and mine development, which are recognised asstand alone economic activities. The model can also be extended to cover the strategies forfund raising adopted by Canadian and Australian prospecting and development companies.At the outset, it is necessary to recognise that large-scale prospecting can be a high-risk andhigh-return venture and only specialist funds that have a penchant for high risk will seekinvestment opportunities in prospecting companies. These companies lack tangible assets orcash flows that can be used to raise debt funds and expand activities, their only attributesbeing that they possess the rights to prospect for a potentially viable resource and thegeological/prospecting knowledge and skills of their management. On the other hand,traditional capital market structures require companies to reach a minimum size of operationsfor them to be listed on a stock market. This restricts the ability of exploration/prospectingcompanies to raise resources through capital market listing.135